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Title:Banking geography and cross-fertilization in the productivity growth of US commercial banks PDF Logo
Authors:Tirtiroglu, Dogan
Tanyeri, A. Basak
Tirtiroglu, Ercan
Daniels, Kenneth N.
Issue Date:2011
Series/Report no.:TÜSİAD-Koç University Economic Research Forum working paper series 1108
Abstract:The US banking industry offers a unique, natural and fertile environment to study geography's effects on banks' behavior and performance. The literature on banks' operating performance, while extensive, says little about the influence of spatial interactions on banks' performance. We compute and examine, using a physical distance-based spatio-temporal empirical model, the state-wide total factor productivity growth (TFPG) indices of US commercial banks for each state for the 1971-1995 period. We observe that the productivity growth of commercial banks in state i depends strongly, positively, and contemporaneously on the productivity growth of commercial banks located in state i's contiguous states. Further, regulatory space appears to induce frictions and lessen the documented spatial interactions. These findings support our plea that research on commercial banking sector's behavior need to pay a particular attention to the effects of banking geography.
Subjects:Spatial
Commercial Banks
Total Factor Productivity Growth
Kalman Filter
JEL:D24
C23
G21
G28
K23
Document Type:Working Paper
Appears in Collections:ERF Working Paper Series, TÜSİAD-Koç University Economic Research Forum (ERF)

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